The Zhitong Finance App learned that Huatai Securities released a research report stating that the overall revenue of the H1 building materials industry is stable.Q2 Cost pressure has been reduced and gross margin has returned to more than 20%.(1) Consumer building materials: 23Q2 is profitable and elastic restoration, and related stocks are expected to benefit; (2) Glass fiber: production capacity is rapidly being invested and demand is suppressed, and recent thick yarn electronic yarn price trends have diverged; (3) Glass: The supply and demand pattern for photovoltaic glass is expected to be optimized, and Q3 for float glass has improved or begun to improve; (4) Others: The profit margin of water reducing agents has improved, and the popularity of traditional building materials may show slow recovery.
▍ The main views of Huatai Securities are as follows:
The overall revenue of the H1 building materials industry remained stable, and Q2 cost pressure was relieved and gross margin returned to more than 20%
Seventy-one companies in the building materials sector achieved 23H1 revenue/net profit of 3902/23.4 billion yuan, -1%/-36% year-on-year; 23Q2 was 2200/18.2 billion yuan, -3%/-20% year-on-year. 23H1 gross margine/net margin was 19%/6%, year on year -3/3pct; 23Q2 was 21%/8%, +5/+5 pct month-on-month.
Overall, revenue and profit were still under pressure in the first half of '23, but the decline in revenue has narrowed compared to the same period in '22, and the sector is bottoming out. The pressure on most raw materials and energy costs has been relieved relatively well. Under the influence of the inventory cycle, 23Q2 profitability has begun to recover, and the overall gross margin has returned to more than 20%. Looking ahead to the future market, the real estate policy will be implemented at an accelerated pace, which is expected to promote the restoration of the physical volume of real estate.
Consumer building materials: 23Q2 profit elasticity restoration, strong sales completion, and related individual stocks are expected to benefit
Segment 23H1 revenue/net profit was +5%/+65%, 23Q2 was +5%/+67%, and profit recovered significantly in the first half of the year. 23h1 sector gross margine/net margin +2.2/+2.8pct; Q2 cost side asphalt/titanium dioxide/national waste/ethylene oxide/hardware materials/PVC resin prices were -7%/-20%/-19%/-11%/-33%/-33%/-33%/-33%/-33%;
Credit impairment losses in the 23H1 sector were 1 billion yuan/year on year -35%, accounting for 1.4% of revenue and -0.9 pct of revenue. In the early stages of the sector, bad debt losses were greatly calculated. With the improvement in overall revenue quality, most companies did not have high exposure to accounts receivable from remaining high-risk private camps, and it is expected that the peak increase in credit impairment measures has passed. As real estate support policies are introduced one after another, it is expected that sales will improve, and individual stocks with a high correlation between sales and completion are expected to benefit.
Glass fiber: Production capacity is rapidly being invested and demand is suppressed. Recently, the price trend of thick yarn electronic yarn has been differentiated
Segment 23H1 revenue/net profit was 251/39 billion yuan, -7.5%/-44.6%, 23Q2 was 149/23 billion yuan, +1.5%/-40.9% YoY. Production capacity was invested rapidly in the first half of the year and demand was boosted slowly. Prices of thick yarn products continued to drop, and electronic yarn prices stabilized recently after falling.
The bottom profit of the industry is fluctuating or limiting investment in new production capacity. Looking ahead to the second half of the year, if demand sides such as wind power installed capacity, consumer electronics demand pick up, and photovoltaic stent application fields expand, it may lead to a recovery in the boom in electronic yarn and high-end thick yarn products.
Glass: The supply and demand pattern of photovoltaic glass is expected to be optimized, and the profit of float glass Q3 may improve or begin
PV glass H1 revenue/net profit was +29.5%/+7.5%, Q2 was +13.9%/-0.2%. The year-on-year decline in prices led to a decline in profitability, and the Q2 net interest rate was -1.6 pct. Float Glass 23H1 revenue/net profit ratio +4%/-37%, 23Q2 +4%/-9% year on year. Real estate is weak but with policy support and completion, demand is relatively stable, and the cost of soda ash Q1 is still relatively high. Considering the impact of the inventory cycle, sector profitability is under pressure, and the Q2 net interest rate is -1.7 pCT year on year.
In the second half of the year, the pace of new photovoltaic glass supply will slow down, the installed photovoltaic capacity is expected to be released at an accelerated pace, and the supply and demand structure is expected to be optimized; demand for float glass is expected to stabilize as real estate policies are implemented at an accelerated pace, so focus on the supply-side resumption of production. Special glass, 23H1 revenue/net profit ratio +20.9%/-11.5%, 23Q2 YoY +13.5%/-12.3%.
Other: The profit margin of water reducing agents has improved, and the popularity of traditional building materials may show slow restoration
Water reducing agent, 23H1 revenue/net profit ratio -8.3%/-19.1%, 23Q2 YoY 6.9%/-14.9%, Q2 gross profit margin 28.7%, Q2 gross profit margin 28.7%, same /month-on-month +0.6 pct. The average price of the raw material ethylene oxide was -19.2% in the Q2 quarter, and the average price in 23Q3 was -11.6%/-6.1% over the same period as of early September. The cost pressure was relieved relatively well.
Concrete, 23H1 revenue/return net profit ratio -9.1%/-146.1%, 23Q2 YoY -6.8%/-57.7%. Cement, 23H1 revenue/net return to income ratio -4.9%/-52.5%, 23Q2 year-on-year ratio -8.5%/-32.8%. Looking ahead to the future market, the implementation of the policy is expected to gradually boost the physical volume associated with underground housing construction, and the boom in traditional building materials may be slowly recovering.
Risk warning:
Investment in infrastructure and real estate declined more than expected, while price increases for raw materials and energy exceeded expectations.